When it comes to driving customer satisfaction, one of our clients (BBC) runs a powerhouse company. Their performance rankings by their customers consistently put them in the top 10% of all the clients in our database. They also have earned an incredible 40% share of their specific market.
The above graphic, from a PMG study, shows BBC’s compelling competitive edge.
Now, many companies sitting this pretty would think that they knew as much as they possibly could about their customers and their industry. Therefore, they might stop worrying about staying competitive or making sure their customers were receiving the value they required. Being number one means you can relax a little, right?
Also, this customer focused client also knows better than to sit on its laurels. From the very beginning, they’ve put a firm emphasis on Customer Insight – and all of us at PMG have been fortunate to be entrusted with delivering monthly customer satisfaction data to them since 1999. I regard it as being a “Curvebuster” – someone who always aces the test and skews the normative averages. The strength of BBC’s relationships with their customers is amazing – and is further enabled by their intelligent use of the Customer Insight surveys we deliver to them on a regular basis.
Just as BBC has learned a great deal of general truisms about its business from using our Customer Insight surveys over the past two decades, all of us at PMG have also been able to “crunch the numbers” from the thousands of surveys we’ve done for multiple suppliers in a wide range of industries – and to produce some normative findings that may surprise the readers of this publication.
This information, centered around the three critical questions we discussed earlier, hasn’t been shared with the general public before now. While we won’t be giving everything away in this section, we will reveal some significant findings, based on both the quantitative and the qualitative data we generate, that we’ve uncovered as a result of our two decades of survey work. In the next section, we’ll take this process to the final step and reveal what we believe to be the important takeaways from these normative results.
This kind of customer satisfaction normative data is rarely seen and difficult to find outside the inner sanctums of individual companies. In fact, many businesses would pay big money for this kind of information. I feel, however, that sharing these findings is important in order to discuss this subject matter as fully as possible and advance the state of the art in Customer Insight. In any event, whatever your business happens to be, I think you’ll find these discoveries as fascinating as we did when we made them.
Performance Norms
In the section, I gave you a look at a sample of what our survey questionnaire looks like. If you’ll remember, in that questionnaire, we ask the customers we’re surveying to rate the performance of our supplier clients across 20 to 25 attributes. Each attribute is rated on a scale of 1 to 7, 7 being the best. Now, that’s a little unusual, as most research companies tend to use a five-point scale or a ten-point scale. Frankly, we found that five points doesn’t give you enough room to adequately reflect performance, while ten points adds too much unnecessary detail to the ranking process.
To delve into this a little further, every scale has a midpoint that you might consider to reflect “average” as far as a grade goes. The truth is, most people grade higher than that midpoint for some reason – it’s called a “left bias” (even though it takes us farther to the right on the scale), and it’s just one of the truisms of the customer research community. This fact essentially splits your scale in half from the start – it means that people who rank something at the midpoint (3.5 of our 7-point scale) are actually giving you a very low grade, not an average one.
This results in a situation where the vast majority of respondents are giving number judgments that land between the midpoint of the scale and the high point. In our case, between 4 and 7 is where the real action happens. Now, if we only used a five-point scale, people would mostly be grading between 3 and 5 – that leaves only one real point, 4, left for a score that is less than perfect. With a ten point scale, you have a lot more choices between the midpoint and 10 – but we’ve found that it unnecessarily complicates the scoring process for those taking a survey; they don’t really need that many choices, so it confuses the issue. A 7-point scale, on the other hand, has proven over time to provide the perfect range for these kinds of surveys
Keeping all the above in mind, our database, which is composed of surveys that use a 7-point scale, which offer an opportunity to rate a best alternate supplier and are done in a strictly B2B context, shows an average of the survey averages of 5.72. This is illustrated in the following graph:
Notice how tight this distribution is – this is what statisticians call variance. Basically, any Customer Insight survey average will be between 4.7 and 6.7. So, although our database average is 5.72, a survey score of 5.3 is very low and a score of 6.2 is very high.
Since statistical theory tells us that a histogram of averages will follow a normal curve, we can compute percentile performance placement for any survey average score. That means we know that a score of 6.23 is at the 90th percentile – 90 percent of companies executing the same survey under the same circumstances will score below 6.23 and only 10% will score above that.
As you’ll notice, we show on the chart where the top 10% of companies perform – this is the area where companies like BBC routinely place with performance scores. Now, let’s go a little deeper into the individual performance attributes that PMG measures.
Over time, we’ve come to realize that, although each individual company will want different performance attributes to be measured, we’ve been able to correlate and combine many of these attributes into a common list. For example, such separate attributes as Meeting Specs, Adhering to Specs, and Consistently Achieving Specs can all be easily put under the umbrella of “Adherence to Specs.”
By continuing that process, we’ve collapsed our clients’ very large combined list of 200 to 300 attributes into 26 that are relatively common to each supplier. You’ll find that list below. Almost every survey we conduct also includes the attribute, “Overall Satisfaction,” which is not only an overall indicator of performance, but serves as a dependent variable for determining importance – as we discussed in the last chapter.
Now, because of the extensive database PMG has on these attributes (for example, we have over 10,000 ratings of overall satisfaction, 25,000 ratings of product performance, etc.), we can state with confidence certain statistical facts about these attributes. For example, the four attributes that are most frequently used in surveys, by the request of our clients, are:
- Product performance
- Customer service
- Responsiveness
- Sales representation
Below, you’ll find a chart featuring the aggregate average ratings of each of the 26 common attributes that are featured on our survey questionnaires (along with the above-mentioned Overall Satisfaction attribute):
From this chart, you can see which attributes are usually ranked the lowest by customers – and which receive the highest ratings. Generally speaking, “Price” ends up getting the lowest marks – most customers just aren’t happy with the cost of the products they buy from suppliers (surprise!). Ranking second-lowest is Marketing Support, while Innovation and Design ranks third-lowest. Overall, this would tend to suggest that these three areas are attributes are weaknesses that most B2B suppliers suffer from, in the eyes of their customers.
Now, let’s look at the highest rated attributes for B2B suppliers – the biggest strengths they tend to demonstrate (or, at least, are the most noticed by the customers). The single highest-rated attribute is Customer Service. As we noted in Chapter 3, usually one person is responsible for this stellar rating – whoever is in charge of servicing the customer’s account at the supplier’s end. This is the person who the customer relies on to understand what the customer needs, knows how to handle any order problems and even knows when to give the customer a heads-up if she sees a potential problem coming down the line. Obviously having the right person in this position is critical to a supplier’s customer relationship. The second highest-ranked attribute by customers similarly has to do with human interactions; Personal Service.